Meaning of Supply of Goods and Services

Under the current indirect tax structure, the taxable event differs for each type of tax. The taxable events under the current indirect tax structure are captured below:

Type of Tax

Taxable Event

Central Excise

Removal of excisable goods

VAT

On sale of goods

Service Tax

Provision of taxable services

The taxable event under GST is the Supply of Goods and/Services. All taxes such as Central Excise, Service Tax and VAT/CST will be subsumed under GST, and the concept of manufacture of goods, sale of goods, and provision of services would no longer be relevant.

Thus, for every business, it is crucial to understand the relevance of supply which sets the scope of transactions liable for the levy of GST.

Relevance of Supply under GST

The term ‘supply’ includes all forms of supply of goods or services, supplied or to be supplied, for a consideration, in the course of or for furtherance of business.

However, there are specific types of supplies mentioned in the law which need to be considered as supply even without a consideration.

Let us understand by categorising the different types of supply as;

Supplies made for a consideration in the course of or for furtherance of business

Supplies without consideration

Supplies made for a consideration whether or not in the course of or for furtherance of business

Supplies made for a consideration in the course of or for furtherance of business

The following are considered as supply with consideration:

Any sale of goods or services which broadly result in the transfer of title in case of goods, and transfer of right to use in case of services.

Any transfers between branches form a part of supply and are taxable. However, GST paid on branch transfers are fully available as Input Tax Credit.

When the consideration is paid through goods instead of money. For example: a seller has supplied goods and the buyer, supplies goods to the extent of payment. Or when one product is exchanged with another product.

Any grant of license to use forms part of supply. For example: online subscriptions